Scotiabank reports strong first quarter earnings of $1.6 billion and increases dividend

Scotiabank reports strong first quarter earnings of $1.6 billion and increases 
dividend 
All amounts are in Canadian dollars and are based on our unaudited
Interim Condensed Consolidated Financial Statements for the quarter
January 31, 2013 and related notes prepared in accordance with
International Financial Reporting Standards (IFRS), unless otherwise
noted. Our First Quarter 2013 Report to Shareholders and Supplementary
Financial Information are available on the Investor Relations page of
www.scotiabank.com. 
Additional information relating to the Bank, including the Bank's
Annual Information Form, can be found on the SEDAR website at
www.sedar.com and on the EDGAR
section of the SEC's website at
www.sec.gov. 


    First quarter financial measures compared to the same period a year ago:
    --  Earnings per share (diluted) of $1.25, compared to $1.20
    --  Net income of $1,625 million, versus $1,436 million
    --  Return on equity of 16.6%, compared to 19.8%
    --  Productivity ratio of 53.5%, same as last year
    --  Quarterly dividend increased by 3 cents to 60 cents per common
        share

TORONTO, March 5, 2013 /CNW/ - Scotiabank reported first quarter net income of 
$1,625 million compared with net income of $1,436 million in the same period 
last year. Diluted earnings per share were $1.25, compared to $1.20 in the 
same period a year ago. Return on equity remained strong at 16.6%. Adjusting 
for a real estate gain last year, income was up 21% and diluted earnings per 
share grew by 11.6%.

"We are beginning the year with strong results," said Rick Waugh, Scotiabank 
CEO. "The Bank's diversity across businesses and geographies continues to 
contribute to solid top-line revenue growth. Once again we saw organic 
growth in all four business lines along with good contributions from 
acquisitions, particularly ING DIRECT in Canada and Banco Colpatria in 
Colombia."

"Canadian Banking had a very strong first quarter, with net income of $574 
million, up 21%, driven by strong top-line revenue growth. We were pleased 
with the solid contribution from ING DIRECT and the launch of our Scotiabank 
American Express credit cards, and the double digit increases in net income in 
our existing Canadian Banking business. This was mainly from strong asset 
growth in most businesses, and low provisions for credit losses.

"With net income of $466 million, International Banking continued to perform 
strongly. In addition to a good contribution from our acquisition of Banco 
Colpatria, there was a strong increase in asset and deposit volumes in our 
high-growth Latin American businesses. Provisions for credit losses have risen 
in line with growth in our portfolios and continuing soft economic conditions 
in the Caribbean.

"Global Wealth Management reported net income of $310 million. Wealth 
management and insurance businesses both contributed to this growth from 
strong sales, domestically and internationally, and improved market 
conditions. The completion of the acquisition of Colfondos in Colombia in 
December also contributed to the increase in assets under management and 
assets under administrationand we look forward to the future contribution 
from this business.

"Global Banking and Markets had a strong quarter with net income of $399 
million. There were strong contributions across the business platform with 
particularly good performance in the fixed income and precious metals 
businesses as well as our corporate lending business in the U.S., Canada and 
Europe.

"The Bank continues to maintain strong, high quality capital levels. The 
Bank's Common Equity Tier 1 capital ratio, on an all-in basis, was 8.2%, well 
above the 7% minimum. The strong level of earnings this quarter and strong 
capital position allowed the Bank to increase its quarterly dividend by 3 
cents to 60 cents per share.

Based on our strong start to the year, and the effective execution of our 
five-point strategy, we are well-positioned to achieve our goals for 2013."

YEAR-TO-DATE PERFORMANCE versus key 2013 financial and operational objectives 
was as follows:
    TARGET #1: Earn a return on equity (ROE)((1)) of 15 to 18%. For the
    three months Scotiabank earned an ROE of 16.6%.
     
    TARGET #2: Generate growth in earnings per common share (diluted)
    of 5 to 10%((2)). Our year-over-year growth in earnings per share
    was 11.6%((2)).
     
    TARGET( )#3: Maintain a productivity ratio((1)) of less than 56%.
    Scotiabank's ratio was 53.5% for the three months.
     
    TARGET #4: Maintain strong capital ratios. Scotiabank's capital
    ratios remain strong by both Canadian and international standards.
     
    ((1) ) Refer below for a discussion of non-GAAP measures.
    ((2) ) Excluding $708 million or 61 cents per share relating to
    real estate gains in 2012, of which $94 million or 8 cents related
    to the first quarter.
     

Financial Highlights
                                                           
                                  As at and for the three months  ended
                                                           
            (Unaudited)       January 31     October 31      January 31
                                    2013           2012            2012
                                                           

Operating results ($
millions)                                                              

Net interest income                2,771          2,580           2,375

Net interest income (TEB(
(1)))                              2,775          2,584           2,380

Non-interest revenue               2,411          2,284           2,246

Non-interest revenue (TEB(
(1)))                              2,481          2,354           2,309

Total revenue                      5,182          4,864           4,621

Total revenue (TEB((1)))
                                   5,256          4,938           4,689

Provision for credit losses
                                     310            321             265

Operating expenses                 2,813          2,713           2,507

Provision for income taxes
                                     434            311             413

Provision for income taxes
(TEB((1)))                           508            385             481

Net income                         1,625          1,519           1,436

Net income attributable to
common shareholders                1,504          1,398           1,343

Operating performance                                                  

Basic earnings per share ($)        1.27           1.20            1.23

Diluted earnings per share 
($)                                 1.25           1.18            1.20

Adjusted diluted earnings
per share((1)(2)) ($)               1.27           1.20            1.22

Return on equity((1)) (%)           16.6           16.4            19.8

Productivity ratio (%)  (TEB
((1)))                              53.5           54.9            53.5

Core banking margin (%) (TEB
((1)))                              2.30           2.35            2.25

Financial position
information ($ millions)                                               

Cash and deposits with
financial institutions((3))       53,120         47,337          45,400

Trading assets                   104,493         87,596          88,086

Loans((3))                       388,610        352,487         332,968

Total assets                     736,361        668,044         637,055

Deposits((3))                    512,561        463,590         451,609

Common equity                     36,768         35,252          28,112

Preferred shares                   4,384          4,384           4,384

Assets under administration(
(1))                             352,073        327,977         310,789

Assets under management((1))     130,576        114,694         106,004

Capital measures((4))                                                  

Common Equity Tier 1 ratio
(%)                                  8.2            N/A             N/A

Tier 1 capital ratio (%)            10.3           13.6            11.4

Total capital ratio (%)             13.5           16.7            13.2

Tangible common equity to
risk-weighted assets((1))
(%)                                 10.1           11.3             8.5

Assets-to-capital multiple          17.3           15.0            17.7

Risk-weighted assets ($
millions)                        280,061        253,309         253,075

Credit quality                                                         

Net impaired loans ($
millions)((5))                     1,902          1,973           1,806

Allowance for credit losses
($ millions)                       3,097          2,969           2,750

Net impaired loans as a % of
loans and acceptances((3)
(5))                                0.48           0.53            0.52

Provisions for credit losses
as a % of average loans and
acceptances
    (annualized)((3))               0.32           0.36            0.32

Common share information                                               

Share price ($) (TSX)                                                  

  High                             59.20          55.00           56.95

  Low                              52.30          51.24           47.54

  Close                            58.65          54.25           51.53

Shares outstanding
(millions)                                                             

  Average - Basic                  1,186          1,166           1,091

  Average - Diluted                1,204          1,184           1,125

  End of period                    1,192          1,184           1,103
                                                                       

Dividends per share ($)
                                    0.57           0.57            0.52

Dividend yield((6)) (%)              4.1            4.3             4.0

Market capitalization ($
millions) (TSX)                   69,896         64,252          56,840

Book value per common share
($)                                30.85          29.76           25.49

Market value to book value
multiple                             1.9            1.8             2.0

Price to earnings multiple
(trailing 4 quarters)               11.0           10.2            10.8

Other information                                                      

Employees                         82,618         81,497          77,302

Branches and offices               3,392          3,123           3,116

(1)     Refer below for a discussion of non-GAAP measures.

(2)     Prior period amounts have been restated to reflect the current
        period definition. Refer below for the definition.

(3)     Prior period amounts and related ratios have been restated to
        reflect the current period presentation of deposits with
        financial institutions and cash collateral on securities
        borrowed and derivative transactions (Refer to Note 3 in the
        condensed interim consolidated financial statements).

(4)     Effective November 1, 2012, regulatory capital ratios are
        determined in accordance with Basel III rules on an all-in
        basis (refer to the MD&A). Comparative amounts for prior
        periods were determined in accordance with Basel II rules and
        have not been restated.

(5)     Excludes Federal Deposit Insurance Corporation (FDIC)
        guaranteed loans related to the acquisition of R-G Premier Bank
        of Puerto Rico.

(6)     Based on the average of the high and low common share price for
        the period.

Forward-looking statements

Our public communications often include oral or written forward-looking 
statements. Statements of this type are included in this document, and may be 
included in other filings with Canadian securities regulators or the United 
States Securities and Exchange Commission, or in other communications. All 
such statements are made pursuant to the "safe harbour" provisions of the 
UnitedStates Private Securities Litigation Reform Act of 1995 and any 
applicable Canadian securities legislation. Forward-looking statements may 
include comments with respect to the Bank's objectives, strategies to achieve 
those objectives, expected financial results (including those in the area of 
risk management), and the outlook for the Bank's businesses and for the 
Canadian, United States and global economies. Such statements are typically 
identified by words or phrases such as "believe", "expect", "anticipate", 
"intent", "estimate", "plan", "may increase", "may fluctuate", and similar 
expressions of future or conditional verbs, such as "will", "should", "would" 
and "could".

By their very nature, forward-looking statements involve numerous assumptions, 
inherent risks and uncertainties, both general and specific, and the risk that 
predictions and other forward-looking statements will not prove to be 
accurate. Do not unduly rely on forward-looking statements, as a number of 
important factors, many of which are beyond our control, could cause actual 
results to differ materially from the estimates and intentions expressed in 
such forward-looking statements. These factors include, but are not limited 
to: the economic and financial conditions in Canada and globally; fluctuations 
in interest rates and currency values; liquidity; significant market 
volatility and interruptions; the failure of third parties to comply with 
their obligations to us and our affiliates; the effect of changes in monetary 
policy; legislative and regulatory developments in Canada and elsewhere, 
including changes in tax laws; the effect of changes to our credit ratings; 
amendments to, and interpretations of, risk-based capital guidelines and 
reporting instructions and liquidity regulatory guidance; operational and 
reputational risks; the risk that the Bank's risk management models may not 
take into account all relevant factors; the accuracy and completeness of 
information the Bank receives on customers and counterparties; the timely 
development and introduction of new products and services in receptive 
markets; the Bank's ability to expand existing distribution channels and to 
develop and realize revenues from new distribution channels; the Bank's 
ability to complete and integrate acquisitions and its other growth 
strategies; changes in accounting policies and methods the Bank uses to report 
its financial condition and financial performance, including uncertainties 
associated with critical accounting assumptions and estimates; the effect of 
applying future accounting changes; global capital markets activity; the 
Bank's ability to attract and retain key executives; reliance on third parties 
to provide components of the Bank's business infrastructure; unexpected 
changes in consumer spending and saving habits; technological developments; 
fraud by internal or external parties, including the use of new technologies 
in unprecedented ways to defraud the Bank or its customers; consolidation in 
the Canadian financial services sector; competition, both from new entrants 
and established competitors; judicial and regulatory proceedings; acts of God, 
such as earthquakes and hurricanes; the possible impact of international 
conflicts and other developments, including terrorist acts and war on 
terrorism; the effects of disease or illness on local, national or 
international economies; disruptions to public infrastructure, including 
transportation, communication, power and water; and the Bank's anticipation of 
and success in managing the risks implied by the foregoing. A substantial 
amount of the Bank's business involves making loans or otherwise committing 
resources to specific companies, industries or countries. Unforeseen events 
affecting such borrowers, industries or countries could have a material 
adverse effect on the Bank's financial results, businesses, financial 
condition or liquidity. These and other factors may cause the Bank's actual 
performance to differ materially from that contemplated by forward-looking 
statements. For more information, see the discussion starting on page 55 of 
the Bank's 2012 Annual Report.

The preceding list of important factors is not exhaustive. When relying on 
forward-looking statements to make decisions with respect to the Bank and its 
securities, investors and others should carefully consider the preceding 
factors, other uncertainties and potential events. The Bank does not undertake 
to update any forward-looking statements, whether written or oral, that may be 
made from time to time by or on its behalf.

The "Outlook" sections in this document are based on the Bank's views and the 
actual outcome is uncertain. Readers should consider the above-noted factors 
when reviewing these sections.

Additional information relating to the Bank, including the Bank's Annual 
Information Form, can be located on the SEDAR website at www.sedar.com and on 
the EDGAR section of the SEC's website at www.sec.gov.

Notable Business Highlights

Recent initiatives
    --  Completed the acquisition of Credito Familiar in Mexico, a 243
        branch operation focused on the Consumer and Micro Finance
        segment.  The Bank's ownership of Credito Familiar represents
        an attractive vehicle to leverage into Mexico the proven
        CrediScotia Peru model for Consumer & Micro Finance.

Recognized for success
    --  Scotia iTRADE was ranked #1 overall in Surviscor's Online
        Discount Brokerage scorCard for the second consecutive review. 
        Surviscor is a semi-annual, impartial assessment of online
        features and functionality at Canadian online discount
        brokerage institutions.  Scotia iTRADE moved to the number one
        position following the launch of its new and much enhanced
        trading platform, with fully integrated online
        brokerage-banking connectivity and single sign-on.
    --  Scotiabank was named as the World's Best Internet Bank for
        Trade Services, 2012 by Global Finance Magazine. Criteria for
        choosing the winners included strength of strategy for
        attracting and servicing online customers, breadth of products
        offered, success in getting clients to use web offerings,
        growth of customer base, and website design and functionality.
    --  Mexico's President Enrique Pena Nieto awarded Scotiabank Mexico
        the "National Agroalimentary Prize" in the Services Category.
         This award represents the highest recognition in the
        Agricultural business in Mexico.

Serving customers
    --  To help Canadians kick-start their 2013 savings, Scotiabank
        introduced a new one-year Guaranteed Investment Certificate
        (GIC) with a special rate of 1.6 per cent.  GICs play a special
        role in a savings plan by offering Canadians a safe way to keep
        their money working.
    --  Scotiabank Mexico launched "De Volada", a new unsecured
        personal loan product with market leading adjudication and
        fulfillment turn-around times, driving exceptional customer
        experience and loan growth.
    --  To provide more choice for customers, Scotia Asset Management
        L.P. announced the launch of six new mutual funds, including
        four new core mandates to Scotia Corporate Class Funds and two
        new mutual fund trusts to ScotiaFunds. Also in the quarter
        Dynamic Funds launched a high yield credit mutual fund and
        Scotia Private client group launched a new real estate pool.
    --  Scotiabank acted as Joint Lead Arranger, Joint Bookrunner &
        Documentation Agent on a USD $5 billion Senior Secured Credit
        Facility for Plains Exploration & Production Company's
        acquisition of certain Gulf of Mexico assets from BP PLC.

Scotiabank's Bright Future program in action
    --  Scotiabank collaborated with Junior Achievement across the
        Caribbean to bring a financial literacy program to local
        secondary school students.  Over the next three years the
        collaboration will provide financial literacy courses to more
        than 14,000 students.
    --  Through a donation to Neptune Studio Theatre in Halifax,
        Scotiabank is providing unique support of a theatre program
        designed to develop contemporary Canadian and regional works of
        art.

NON-GAAP MEASURES

The Bank uses a number of financial measures to assess its performance. Some 
of these measures are not calculated in accordance with International 
Financial Reporting Standards (IFRS), are not defined by IFRS and do not have 
standardized meanings that would ensure consistency and comparability between 
companies using these measures. These non-GAAP measures are used throughout 
this report and defined below.

Assets under administration (AUA)
AUA are assets administered by the Bank which are beneficially owned by 
clients and therefore not reported on the Bank's statement of financial 
position. Services provided for AUA are of an administrative nature, such as 
trusteeship, custodial, safekeeping, income collection and distribution; 
securities trade settlements, customer reporting, and other similar services.

Assets under management (AUM)
AUM are assets managed by the Bank on a discretionary basis and in respect of 
which the Bank earns investment management fees. AUM are beneficially owned by 
clients and are therefore not reported on the Bank's consolidated statement of 
financial position. Some AUM are also administered assets and are therefore 
included in assets under administration, under these circumstances.

Adjusted diluted earnings per share
The adjusted diluted earnings per share is calculated by adjusting the diluted 
earnings per share to add back the non-cash, after-tax amortization of 
intangible assets related to acquisitions (excluding software).

Economic equity and return on economic equity
For internal reporting purposes, the Bank attributes capital to its business 
segments based on their risk profile and uses a methodology that considers 
credit, market, operational and other risks inherent in each business segment. 
The amount of risk capital attributed is commonly referred to as economic 
equity. In the current period the economic equity methodology was updated to 
include new models and assumptions. The changes have been applied 
prospectively. Return on economic equity for the business segments is 
calculated as a ratio of net income attributable to common shareholders of the 
business segment and the economic equity attributed.

Core banking margin (TEB)
This ratio represents net interest income (on a taxable equivalent basis) on 
average earning assets excluding bankers acceptances and total average assets 
relating to the Global Capital markets business within Global Banking and 
Markets. This is consistent with the classification of net interest from 
trading operations in revenues from trading operations recorded in other 
operating income.

Operating leverage (TEB)
The Bank defines operating leverage as the rate of growth in total revenue (on 
a taxable equivalent basis), less the rate of growth in operating expenses.

Productivity ratio (TEB)
Management uses the productivity ratio as a measure of the Bank's efficiency. 
This ratio represents operating expenses as a percentage of total revenue 
(TEB).

Return on equity
Return on equity is a profitability measure that presents the net income 
attributable to common shareholders as a percentage of common shareholders' 
equity. The Bank calculates its return on equity using average common 
shareholders' equity.

Tangible common equity to risk-weighted assets
Tangible common equity to risk-weighted assets is an alternative financial 
measure for assessing the quality of capital. Tangible common equity is total 
common equity plus non-controlling interests in subsidiaries, less goodwill 
and unamortized intangible assets (net of taxes). Tangible common equity is 
presented as a percentage of risk-weighted assets. In prior years, 
risk-weighted assets were comprised of Basel II risk-weighted assets adjusted 
for intangible assets deducted from tangible common equity. For 2013, the 
tangible common equity ratio includes Basel III risk-weighted assets, adjusted 
to include amounts recognized as regulatory deductions at 100% risk weight.

Regulatory capital ratios, such as Common Equity Tier1, Tier1 and Total 
Capital ratios, have standardized meanings as defined by the Office of the 
Superintendent of Financial Institutions Canada.

Taxable equivalent basis

The Bank analyzes net interest income, other operating income, and total 
revenue on a taxable equivalent basis (TEB). This methodology grosses up 
tax-exempt income earned on certain securities reported in either net interest 
income or other operating income to an equivalent before tax basis. A 
corresponding increase is made to the provision for income taxes; hence, there 
is no impact on net income. Management believes that this basis for 
measurement provides a uniform comparability of net interest income and other 
operating revenue arising from both taxable and non-taxable sources and 
facilitates a consistent basis of measurement. While other banks also use TEB, 
their methodology may not be comparable to the Bank's methodology. For 
purposes of segmented reporting, a segment's revenue and provision for income 
taxes are grossed up by the taxable equivalent amount. The elimination of the 
TEB gross up is recorded in the Other segment. The TEB gross up to net 
interest income, other operating income, total revenue and provision for 
income taxes are presented below:
                                                                       
                                     For the three months ended
                                                                

TEB Gross     January 31   October 31   July 31   April 30   January 31
up                  2013         2012      2012       2012         2012
($
millions)

Net           $        4   $        4   $     5   $      3   $        5
interest
income

Other                 70           70        72         66           63
operating
income

Total         $       74   $       74   $    77   $     69   $       68
revenue and
provision
for taxes
                                                                

Group Financial Performance

Financial results

Scotiabank's net income for the first quarter was $1,625 million, compared 
with $1,436 million for the same period last year and $1,519 million last 
quarter.

Diluted earnings per share were $1.25, compared to $1.20 in the same period a 
year ago, which included a gain on sale of a real estate asset in Western 
Canada of 8 cents per share. Adjusting for this gain in 2012, diluted earnings 
per share grew by 11.6%.

Diluted earnings per share increased 5.9% from $1.18 in the last quarter.

Return on equity remained strong at 16.6%, compared to 19.8% last year and 
16.4% last quarter.

Impact of foreign currency translation 
The table below reflects the impact of foreign currency translation on the 
year-over-year and quarter-over-quarter change in key income statement items. 
The impact of foreign currency translation was not significant quarter over 
quarter or year over year.
                                                       

($ millions except                                For the three
per share amounts)                                months ended
                                                       
                                Jan. 31, 2013 vs.   Jan. 31, 2013 vs.
                                  Jan. 31, 2012       Oct. 31, 2012

U.S./Canadian dollar                                   
   exchange rate (average)

January 31, 2013                $  1.007            $ 1.007  

October 31, 2012                                    $ 1.014  

January 31, 2012                $  0.979                     

% change                              3  %              -1  %

Impact on income:                                            

Net interest income             $   (16)            $    14  

Net fee and commission revenues      (7)                  6  

Other operating income               (8)                  6  

Operating expenses                     6               (12)  

Other items (net of tax)               4                (5)  

Net income                      $   (21)            $     9  

Earnings per share (diluted)    $ (0.02)            $  0.01  

Impact by business line:                                     

Canadian Banking                $    (2)            $     -  

International Banking                (6)                  6  

Global Wealth Management             (3)                  1  

Global Banking and Markets          (10)                  3  

Other                           $     -             $   (1)  
                                                       

Q1 2013 vs Q1 2012

Net income 
Scotiabank's net income was $1,625 million in the first quarter, an increase 
of $189 million or 13% from the same period a year ago. Last year's results 
included an after-tax real estate gain of $94million. Excluding this gain, 
net income was up 21%. Acquisitions, primarily ING Bank of Canada (ING DIRECT) 
and Banco Colpatria, contributed approximately 40% to the year-over-year 
growth. The remaining growth was attributable to higher net interest income, 
growth in wealth management and transaction-based banking revenues, increased 
contributions from associated corporations and stronger trading revenues. 
These increases were partly offset by higher operating expenses and provisions 
for credit losses.

Total revenue 
Total revenue (on a taxable equivalent basis) was $5,256 million, up $567 
million or 12% from the same quarter last year, or 15% excluding the real 
estate gain recorded last year. Acquisitions accounted for $355 million of 
this increase. The remaining increase was attributable to higher net interest 
income from asset growth, strong banking and wealth management fees, improved 
trading revenues, and increased contributions from associated corporations.

Net interest income 
This quarter's net interest income (on a taxable equivalent basis) of $2,775 
million was $395 million or 17% higher than the same quarter last year. This 
was attributable to acquisitions and asset growth primarily in business 
lending, residential mortgages and personal lending. The core banking margin 
was 2.30% up from 2.25% last year.

The increase in the margin was primarily from higher margins in Colombia, a 
wider spread on the Canadian floating rate portfolio and lower volumes of low 
spread deposits with banks. This was partially offset by the inclusion of the 
lower-spread ING DIRECT portfolio.

Net fee and commission revenues 
Net fee and commission revenues of $1,661 million were $161 million or 11% 
higher than the same period last year. The growth was attributable to recent 
acquisitions and higher wealth management revenues, from growth in assets 
under management and assets under administration, and improved financial 
markets. There were also increased transaction-based banking fees, in 
particular payment fees.

Other operating income 
Other operating income (on a taxable equivalent basis) was $820 million 
compared to $809 million in the same quarter last year. Included in last 
year's results was the gain on sale of a real estate asset of $111 million. 
Excluding this gain, other operating income was up $122 million or 17%. 
Contributions from associated corporations were higher than the prior year 
primarily reflecting stronger earnings from Thanachart Bank in Thailand. 
Trading revenue was up from the same period last year, mainly in the fixed 
income business. Net gains on investment securities and insurance income were 
also higher.

Provision for credit losses 
The provision for credit losses was $310 million this quarter, up $45 million 
from the same period last year. The year-over-year increase was due primarily 
to higher provisions in retail and commercial lending in International 
Banking, partially offset by lower provisions in Canadian Banking. Further 
discussion on credit risk is provided in the MD&A.

Operating expenses and productivity 
Operating expenses were $2,813 million this quarter, up $306 million or 12% 
from the same quarter last year. Acquisitions accounted for $170 million of 
the increase. The remaining growth was primarily in compensation-related 
expenses. The increase reflected higher staffing levels and annual merit 
increases, growth in performance-based compensation in line with higher income 
levels, and increased pension and benefit expenses. The latter increase was 
primarily due to the impact of the continued low interest rate environment. 
There were also higher premises costs, primarily from rental expenses due to 
the sale of Scotia Plaza in the prior year.

The productivity ratio of 53.5% remained unchanged from the same quarter last 
year. Operating leverage year over year was positive 2.7%, adjusting for the 
real estate gain last year.

Taxes 
The effective tax rate for this quarter was 21.1%, down from 22.3% in the 
first quarter last year. This quarter the tax rate benefitted from foreign tax 
recoveries, higher income in low tax jurisdictions and lower non-deductible 
expenses. Last year's tax rate was favourably impacted by lower taxes on the 
gain on sale of the real estate asset.

Q1 2013 vs Q4 2012

Net income 
Net income was $1,625 million, up $106 million or 7% from the fourth quarter. 
The increase was due primarily to contributions from ING DIRECT, higher net 
interest income from asset growth, stronger wealth management and trading 
revenues and increased income from associated corporations. These items were 
partly offset by an increase in operating expenses and the impact of a higher 
effective income tax rate.

Total revenue 
Total revenue (on a taxable equivalent basis) of $5,256 million was $318 
million or 6% higher quarter over quarter. Recent acquisitions accounted for 
$125 million of the growth. The remaining increase was primarily from higher 
net interest income, as well as strong contributions from associated 
corporations. There were also higher wealth management revenues. Trading 
results were stronger quarter over quarter, while underwriting revenues 
declined.

Net interest income 
Net interest income (on a taxable equivalent basis) was $2,775 million, up 
$191 million or 7% from the previous quarter. This was attributable to 
acquisitions and asset growth, primarily in business lending and residential 
mortgages. The core banking margin of 2.30% was down from 2.35% last quarter.

The decline in core banking margin was due entirely to the impact of ING 
DIRECT, which has lower spread assets. Adjusting for this, the margin was in 
line with last quarter.

Net fee and commission revenues 
Compared to the previous quarter, net fee and commission revenue of $1,661 
million was up $27 million or 2%. The increase was due mainly to stronger 
mutual fund and retail brokerage revenues, from growth in assets under 
management and assets under administration and improved financial markets. 
These increases were partly offset by reduced underwriting fees and modest 
decline in transaction-based revenues.

Other operating income 
Other operating income (on a taxable equivalent basis) rose $100 million or 
14% to $820 million. Trading revenues were up quarter over quarter, mainly in 
the fixed income and precious metals business. Net income from associated 
corporations was also stronger this quarter, primarily from a higher 
contribution from Thanachart Bank.

Provision for credit losses 
The provision for credit losses was $310 million this quarter, down $11 
million from the prior quarter. This decline was due primarily to lower 
provisions in commercial lending in Canadian Banking and Global Banking and 
Markets, partially offset by higher provisions in International Banking. 
Further discussion on credit risk is provided in the MD&A.

Operating expenses and productivity 
Compared to the fourth quarter, operating expenses were up $100 million or 4%, 
of which $60 million related to acquisitions. The remaining increase of 1% was 
due primarily to growth in compensation-related expenses as a result of annual 
merit increases and higher stock-based compensation. The latter was mainly 
from the seasonal impact of vesting of new grants awarded to employees 
eligible to retire. Pension and other benefit costs were also up, mostly 
reflecting the impact of the continued low interest rate environment. In 
addition, benefit costs were lower last quarter due to actuarial revaluations 
of long-term benefit plans. These increases were partly offset by lower 
expenses in almost all of the other expense categories, due mainly to 
seasonally higher expenses in the prior quarter.

The productivity ratio was 53.5%, compared to 54.9% in the previous quarter.

Taxes 
This quarter, the effective tax rate increased to 21.1% from 17.0% in the 
prior quarter. The increase was primarily from lower foreign tax recoveries 
and proportionately lower tax-exempt income. As well, last quarter's tax rate 
benefitted from an increase in deferred tax assets due to changes in tax rates 
in foreign subsidiaries.

Financial position

The Bank's total assets at January 31, 2013 were $736 billion, up $68 billion 
or 10% from October 31, 2012, including approximately $41 billion upon the 
acquisition of ING DIRECT. The impact of foreign currency translation was not 
significant.

Cash and deposits with financial institutions grew by $6 billion, due mainly 
to increases in interest bearing deposits with central banks.

Precious metals decreased $1 billion due to lower prices and inventory.

Securities purchased under resale agreements and securities borrowed increased 
by $7 billion.

Trading assets increased $17 billion from October 31, 2012, almost entirely in 
trading securities from higher holdings of common equities, and U.S. and other 
foreign government debt.

Investment securities grew by $5 billion due mainly to increased holdings of 
Canadian government debt from the acquisition of ING DIRECT. As at January 31, 
2013, the unrealized gain on available-for-sale securities, after the impact 
of qualifying hedges is taken into account, was $1,023 million, an increase of 
$132 million from October 31, 2012. The change was due primarily to increases 
in the values of common equities.

Loans increased $36 billion or 10% from October 31, 2012. Business and 
government loans rose $4 billion due primarily to growth in Latin America and 
Asia, as well as in Canada due mainly to the acquisition of ING DIRECT. In 
retail lending, residential mortgages increased $31 billion almost entirely 
from the acquisition of ING DIRECT. Personal and credit card loans rose $2 
billion due mainly to growth in Latin America.

Total liabilities were $693 billion as at January 31, 2013, up $67 billion or 
11% from October 31, 2012, including approximately $38 billion upon the 
acquisition of ING DIRECT.

Total deposits increased by $49 billion. Personal deposits grew by $30 billion 
primarily from the acquisition of ING DIRECT. Business and government deposits 
increased $16 billion from both the ING DIRECT acquisition as well as growth 
in the U.S. Deposits by banks increased $2 billion in the U.S. and Asia.

Obligations related to securities sold under repurchase agreements and 
securities lent as well as obligations related to securities sold short grew 
by $15 billion and $6 billion, respectively. Derivative instrument liabilities 
decreased $3 billion, which was similar to the decrease in derivative 
instrument assets.

Total equity increased $1,585 million from October 31, 2012. This increase was 
driven by internal capital generation of $829 million, the issuance of common 
shares of $413 million, comprised of $99 million for the purchase of Colfondos 
in Colombia and $314 million through the Dividend Reinvestment Plan and the 
exercise of options. Other reserves were up $31 million.

Accumulated other comprehensive income increased $243 million due mainly to 
higher unrealized gains on available-for-sale securities and reduced 
unrealized foreign exchange losses on the Bank's investments in its foreign 
operations.

Non-controlling interests in subsidiaries increased $107 million due mainly to 
current period net income attributable to non-controlling interests and the 
acquisition of Colfondos. Non-controlling interests - capital instrument 
equity holders decreased $38 million due mainly to distributions.

Capital ratios

The Bank's various regulatory capital amounts consist of the following:
                                                             
                                                  As at
                                                             
                                 January 31      October 31  
                                        2013           2012
                                                  
                                  Basel III                  
            ($ millions)              All-in       Basel II
                                                             

Common Equity Tier 1 capital   $  23,014       $        n/a  

Tier 1 capital                    28,960             34,436  

Total regulatory capital       $  37,818       $     42,193  

Total risk-weighted assets     $ 280,061       $    253,309  

Capital ratios:                                              

Common Equity Tier 1 capital       8.2 %                n/a  

Tier 1 capital ratio              10.3 %              13.6%  

Total capital ratio               13.5 %              16.7%  

Assets-to-capital multiple         17.3x              15.0x  
                                

The Bank continues to maintain a strong capital position. The CET1, Tier 1 and 
Total Capital ratios under Basel III all-in were 8.2%, 10.3% and 13.5% 
respectively, well above minimum requirements. As at October 31, 2012, the 
Basel II Tier 1 and Total Capital ratios were 13.6% and 16.7% respectively.

The Basel III all-in Tier 1 and Total ratios are lower than Basel II ratios 
due to the introduction of additional regulatory deductions including 
intangibles below Basel II threshold, deferred tax assets that rely on future 
profitability, and defined-benefit pension fund net assets.

The increase in risk-weighted assets of $27 billion was due to the 
implementation of the Basel III requirements ($12 billion), the acquisition of 
ING DIRECT ($5 billion) and organic growth ($10 billion).

Business Segment Review

Scotiabank's results, average assets, and average liabilities, allocated by 
these operating segments are as follows:
                                                                                           
                                        For the three months ended January 31, 2013


                                                            Global
Taxable                                                        Banking
equivalent basis(   Canadian   International   Global Wealth       and    Other(
(1)) ($ millions)    Banking         Banking      Management   Markets      (2))      Total 
Net interest                                                   $   217   $ (129)   $  2,771
income              $  1,361   $       1,200   $         122 
Net fee and                                                        305      (45)      1,661
commission
revenues                 384             334             683 
Net income from                                                      -      (47)        150
investments in
associated
corporations               9             132              56 
Other operating                                                    427      (22)        600
income                     1              90             104 
Provision for                                                        5         -        310
credit losses            118             186               1 
Other operating                                                    406         -      2,813
expenses                 861             976             570 
Provision for                                                      139     (119)        434
income taxes             202             128              84 
Net income                                                     $   399   $         $  1,625 


                    $    574   $         466   $         310               (124)

Net income                                                                          
attributable to
non-controlling
interests                                                   

  Non-controlling                                          9         -         -         59
  interests in
  subsidiaries             -              50    

  Capital                                                  -         -         7          7
  instrument
  equity holders           -               -    

Net income                                                     $   399   $ (131)   $  1,559
attributable to
equity holders of
the Bank            $    574   $         416   $         301

Average assets                                                 $   240   $    93   $    729
($ billions)        $    267   $         115   $          14

Average                                                        $   175   $   234   $    687
liabilities
($ billions)        $    185   $          76   $          17

(1)     Refer above for a discussion of non-GAAP measures.

(2)     Includes all other smaller operating segments and corporate
        adjustments, such as the elimination of the tax-exempt income
        gross-up reported in net interest income and other operating
        income and provision for income taxes for the three months
        ended January 31, 2013 ($74) to arrive at the amounts reported
        in the Consolidated Statement of Income, differences in the
        actual amount of costs incurred and charged to the operating
        segments.
         
                                                                                            
                                         For the three months ended October 31, 2012


                                                           Global
Taxable                                                       Banking
equivalent basis( Canadian   International   Global Wealth        and     Other(
(1)) ($ millions)  Banking         Banking      Management    Markets       (2))       Total 
Net interest      $ 1,229    $      1,153    $        125     $  217     $ (144)    $ 2,580 
income 
Net fee and           376             352             646        338        (78)      1,634 
commission
revenues 
Net income from        (2)            103              53          1        (37)        118 
investments in
associated
corporations 
Other operating        (2)             84              99        361        (10)        532 
income 
Provision for         132             176               2         11          -         321 
credit losses 
Other operating       820             979             538        390       (14)       2,713 
expenses 
Provision for         168              84              83        120       (144)        311 
income taxes 
Net income        $   481    $        453    $        300    $   396    $  (111)   $  1,519  
Net income                                                                                  
attributable to
non-controlling
interests 
Non-controlling        -             52               6          1           -          59
  interests in
  subsidiaries 
Capital                -               -               -          -         7           7 
  instrument
  equity holders 
Net income        $   481    $        401    $        294     $  395     $ (118)    $ 1,453 
attributable to
equity holders of
the Bank 
Average assets ($ $   232    $        111    $         14     $  232     $   89     $   678 
billions) 
Average           $   153    $         73    $         16     $  174     $  222     $   638 
liabilities 
(1)      Refer above for a discussion of non-GAAP measures. 
(2)      Includes all other smaller operating segments and corporate 


         adjustments, such as the elimination of the tax-exempt income
         gross-up reported in net interest income and other operating
         income and provision for income taxes for the three months
         ended October 31, 2012 ($74), to arrive at the amounts
         reported in the Consolidated Statement of Income, differences
         in the actual amount of costs incurred and charged to the
         operating segments.  
          
                   
                                      For the three months ended January 31, 2012


                                                          Global
Taxable                                                      Banking
equivalent basis( Canadian   International   Global Wealth       and   Other(
(1)) ($ millions)  Banking         Banking      Management   Markets     (2))      Total 
Net interest      $ 1,174    $      1,003    $        123    $  170    $ (95)   $ 2,375 
income 
Net fee and           365             291             586       289               1,500 
commission                                                               (31)
revenues 
Net income from         1              68              53         -      (29)        93 
investments in
associated
corporations 
Other operating         9              89              97       386       72        653 
income 
Provision for         136             124               -         5        -        265 
credit losses 
Other operating       768             845             495       390        9      2,507 
expenses 
Provision for         170              91              76       139      (63)       413 
income taxes 
Net income        $   475    $        391    $        288    $  311    $ (29)   $ 1,436  
Net income                                                                              
attributable to
non-controlling
interests 
Non-controlling       1              18               6         -        -         25 
  interests in
  subsidiaries 
Capital               -               -               -         -       13         13 
  instrument
  equity holders 
Net income        $   474    $        373    $        282    $  311    $ (42)   $ 1,398 
attributable to
equity holders of
the Bank 
Average assets ($ $   219    $        101    $         13    $  206    $  97    $   636 
billions) 
Average           $   147    $         63    $         15    $  159    $ 219    $   603 
liabilities 
(1)      Refer above for a discussion of non-GAAP measures. 
(2)      Includes all other smaller operating segments and corporate 


         adjustments, such as the elimination of the tax-exempt income
         gross-up reported in net interest income and other operating
         income and provision for income taxes for the three months
         ended January 31, 2012 ($68) to arrive at the amounts reported
         in the Consolidated Statement of Income, differences in the
         actual amount of costs incurred and charged to the operating
         segments.  
          

Canadian Banking

Q1 2013 v Q1 2012
Canadian Banking reported net income attributable to equity holders of $574 
million in the first quarter. The increase of $100 million or 21% from the 
same period last year was driven by the acquisition of ING DIRECT, strong 
organic asset growth and a lower provision for credit losses. Return on 
economic equity decreased to 36.3% from 38.8% last year, mainly reflecting the 
inclusion of ING DIRECT.

Q1 2013 v Q4 2012
Quarter over quarter, net income attributable to equity holders increased $93 
million or 19%, of which $45 million was from the ING DIRECT acquisition. 
Organic growth of 10% reflected higher net interest income driven by strong 
asset growth and lower provision for credit losses. Return on economic equity 
decreased to 36.3% from 37.7% last quarter.

International Banking

Q1 2013 v Q1 2012
International Banking reported a strong first quarter with net income 
attributable to equity holders of $416 million, an increase of $43 million or 
12% over last year. The increase was driven by strong loan growth in Latin 
America, the acquisition of Banco Colpatria in Colombia, and higher income 
from investments in associated corporations, partly offset by increased 
provisions for credit losses. Return on economic equity was 13.9% versus 12.7% 
in the same quarter last year.

Q1 2013 v Q4 2012
Net income attributable to equity holders increased by $15 million or 4% to 
$416 million. This was driven by solid asset growth, particularly in Latin 
America and higher net income from investments in associated corporations. 
Partly offsetting were seasonally higher retail fees in Chile in the previous 
quarter. Return on economic equity was 13.9% versus 12.4% last quarter.

Global Wealth Management

Q1 2013 v Q1 2012
Global Wealth Management reported net income attributable to equity holders of 
$301 million this quarter, an increase of $19 million or 7% from the same 
quarter last year. Net income increased due to strong results from both the 
wealth management and insurance businesses. Growth in wealth management was 
driven by higher assets under management (AUM) and assets under administration 
(AUA) from net sales and improved financial markets. There were also higher 
revenues from global insurance. Return on economic equity was 17.0% compared 
to 14.0% last year.

Q1 2013 v Q4 2012
Quarter over quarter, net income attributable to equity holders increased by 
$7 million or 2% due mostly to growth in brokerage and mutual fund fees, and 
higher international wealth and insurance revenues, partially offset by 
increased expenses.

Global Banking and Markets

Q1 2013 v Q1 2012
Global Banking and Markets continued its very strong performance, reporting 
net income attributable to equity holders of $399 million in the first 
quarter, the second highest quarterly result on record. The year-over-year 
increase of $88 million or 28%, was due to stronger revenues across the 
business platform. Return on economic equity was 30.8% this quarter compared 
to 23.2% in the same period last year.

Q1 2013 v Q4 2012
Net income attributable to equity holders increased $4 million or 1% compared 
to the prior quarter, continuing the strong trend of the last few quarters. 
Higher revenues in most businesses and lower provisions for credit losses were 
partly offset by modestly higher expenses. Return on economic equity increased 
slightly to 30.8% from 30.1%.

Other

The Other segment includes Group Treasury, smaller operating segments and 
other corporate items which are not allocated to a business line.

Net interest income, other operating income, and the provision for income 
taxes in each period include the elimination of tax-exempt income gross-up. 
This amount is included in the operating segments, which are reported on a 
taxable equivalent basis. The elimination was $74 million in the first 
quarter, compared to $68 million in the same period last year and $74 million 
last quarter.

Net income from investments in associated corporations and the provision for 
income taxes in each period include the tax normalization adjustments related 
to the gross-up of income from associated companies. This adjustment 
normalizes the effective tax rate in the divisions to better present the 
contribution of the associated companies to the divisional results.

Q1 2013 v Q1 2012
The Other segment had a net loss attributable to equity holders of $131 
million in the first quarter, compared to a net loss of $42 million last 
year. Adjusting for last year's after-tax gain of $94 million from the sale 
of a real estate asset, the net loss last year was $136 million. Higher net 
gains on investment securities were mostly offset by lower revenues from 
asset/liability management activities.

Q1 2013 v Q4 2012 

The Other segment had a net loss attributable to equity holders of $131 
million in the first quarter, compared to a net loss of $118 million in the 
prior quarter. The quarter-over-quarter increase in the net loss was mainly 
from higher taxes and lower net gains on investment securities. Partly 
offsetting was a lower intercompany elimination related to the underwriting of 
the Bank's common share issuance in the comparative quarter. The latter had 
no impact on the Bank's consolidated results.

Shareholder Information

Direct deposit service
Shareholders may have dividends deposited directly into accounts held at 
financial institutions which are members of the Canadian Payments Association. 
To arrange direct deposit service, please write to the transfer agent.

Dividend and Share Purchase Plan
Scotiabank's dividend reinvestment and share purchase plan allows common and 
preferred shareholders to purchase additional common shares by reinvesting 
their cash dividend without incurring brokerage or administrative fees.

As well, eligible shareholders may invest up to $20,000 each fiscal year to 
purchase additional common shares of the Bank. Debenture holders may apply 
interest on fully registered Bank subordinated debentures to purchase 
additional common shares. All administrative costs of the plan are paid by the 
Bank.

For more information on participation in the plan, please contact the transfer 
agent.

Dividend dates for 2013
Record and payment dates for common and preferred shares, subject to approval 
by the Board of Directors.
                       

Record Date           Payment Date

January 2             January 29

April 2               April 26

July 2                July 29

October 1             October 29
                       
                       

Annual Meeting date for fiscal 2013
The Annual Meeting for the fiscal year 2013 is scheduled for April8, 2014, 
in Kelowna, British Columbia, Canada.

Duplicated communication
If your shareholdings are registered under more than one name or address, 
multiple mailings will result. To eliminate this duplication, please write to 
the transfer agent to combine the accounts.

Website
For information relating to Scotiabank and its services, visit us at our 
website: www.scotiabank.com.

Conference call and Web broadcast
The quarterly results conference call will take place on March5, 2013, at 
2:00pm EST and is expected to last approximately one hour. Interested 
parties are invited to access the call live, in listen-only mode, by 
telephone, toll-free, at(416)644-3414 or 1-800-814-4859 (please call five 
to 15 minutes in advance). In addition, an audio webcast, with accompanying 
slide presentation, may be accessed via the Investor Relations page of 
www.scotiabank.com. Following discussion of the results by Scotiabank 
executives, there will be a question and answer session.

A telephone replay of the conference call will be available from March6, 
2013, to March20, 2013, by calling (416)640-1917 or 1-877-289-8525 and 
entering the identification code 4584490#. The archived audio webcast will be 
available on the Bank's website for three months.

Contact information

Investors:

Financial analysts, portfolio managers and other investors requiring financial 
information, please contact Investor Relations, Finance Department:

Scotiabank
Scotia Plaza, 44 King Street West Toronto, Ontario, Canada M5H 1H1
Telephone: (416)775-0798
Fax: (416)866-7867
E-mail: investor.relations@scotiabank.com 
Media:
For other information and for media enquiries, please contact the Public, 
Corporate and Government Affairs Department at the above address.

Telephone: (416)933-1344
Fax: (416)866-4988
E-mail: corpaff@scotiabank.com 
Shareholders:
For enquiries related to changes in share registration or address, dividend 
information, lost share certificates, estate transfers, or to advise of 
duplicate mailings, please contact the Bank's transfer agent:

Computershare Trust Company of Canada
100 University Avenue, 9th Floor Toronto, Ontario, Canada M5J 2Y1
Telephone: 1-877-982-8767
Fax: 1-888-453-0330
E-mail: service@computershare.com 
Co-Transfer Agent (U.S.A.)
Computershare Trust Company N.A.
250 Royall Street
Canton, MA 02021 U.S.A.
Telephone: 1-800-962-4284 
For other shareholder enquiries, please contact the Finance Department:
Scotiabank
Scotia Plaza, 44 King Street West Toronto, Ontario, Canada M5H 1H1
Telephone: (416)866-4790
Fax: (416)866-4048
E-mail: corporate.secretary@scotiabank.com

Rapport trimestriel disponible en français
Le Rapport annuel et les états financiers de la Banque sont publiés en 
français et en anglais et distribués aux actionnaires dans la version de 
leur choix. Si vous préférez que la documentation vous concernant vous soit 
adressée en français, veuillez en informer Relations publiques, Affaires de 
la société et Affaires gouvernementales, La Banque de Nouvelle-Écosse, 
Scotia Plaza, 44, rue King Ouest, Toronto (Ontario), Canada M5H 1H1, en 
joignant, si possible, l'étiquette d'adresse, afin que nous puissions prendre 
note du changement.

The Bank of Nova Scotia is incorporated in Canada with limited liability.





Peter Slan, Senior Vice President, Investor Relations, (416) 933-1273;  Ann 
DeRabbie, Director, Media Communications, (416) 933-1344

SOURCE: Scotiabank

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CO: Scotiabank - Financial Releases
ST: Ontario
NI: FIN ERN CONF 

-0- Mar/05/2013 12:30 GMT


 
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